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Guest Columns

Important decisions for U.S. dairy

Connie Tipton

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

The U.S. dairy industry is at a crossroads, and we at the International Dairy Foods Association (IDFA) are optimistic that the dairy industry can continue to be a strong economic engine for our country. Domestically, dairy products are facing increased competition for shelf space, but we can fight back with innovative, new products. Emerging global markets offer enormous opportunities and promise to create growth for producers and processors.

But we also recognize that being competitive in world markets has exposed dairy farmers to the volatility of the international marketplace. And the current regulatory and support system has failed them ­— and in many respects made conditions worse.

It’s clear that the direction taken on dairy policy in the next farm bill will be extremely important, especially to the members of our organization. That’s why the boards of directors of IDFA and its constituent organizations ­—the Milk Industry Foundation, the National Cheese Institute and the International Ice Cream Association — spent the lion’s share of their time at meetings earlier this month carefully considering what dairy policy reform should look like.

In general, they believe it’s time to decrease regulations in our highly regulated industry. Whether called quotas, growth or supply management, or market stabilization, new government programs that are designed to manipulate milk prices by limiting supply can only add to the bureaucracy and are non-starters.

On the other hand, there is strong support for initiatives to ensure that dairy farmers have the tools they need to manage volatility as we recognize and appreciate that we depend upon our producers to reliably deliver a quality product. And our boards support policy initiatives that will help the industry grow, not only through increased consumption and product innovation in the United States, but by taking advantage of new and growing export opportunities.

In the lead-up to these meetings, our directors sincerely believed that others in the dairy industry would want the same. But after spending the last couple of years working on joint committees with members of the National Milk Producers Federation (NMPF), as well as within our own organization, our board members came to the realization that the package of proposals already passed by the NMPF board contained provisions most of them just couldn’t agree to support.

As I’ve said, our industry is at a crossroads. It is unfortunate that we have to take a path different from NMPF, because it would be ideal to have agreement on policy directions across the entire dairy industry. But after hours of discussion, our boards rejected the package proposed by NMPF for two main reasons. First, it calls on government to intrude in our markets to manage volatility instead of providing producers with the tools to manage the risk of volatility. Second, it adds more layers of complication to the federal milk marketing order system, instead of making it simpler and less intrusive to our industry.

We recognize that it’s not enough to simply say no, so our board members considered several other policy proposals, measuring them against IDFA’s guiding principles to ensure that they:

• provide an effective dairy farm safety net based on farm income or milk margin;

• have a competitive orientation focused on fostering innovation and growth;

• enhance demand rather than control prices and supply; and

•support trade expansion.

With these principles as a foundation, they voted to support a number of policy ideas, most of which agree with recommendations made by the U.S. Department of Agriculture’s Dairy Industry Advisory Committee. Some even mirror components of the NMPF package.

All of the policy suggestions approved by the board support or encourage greater opportunity and growth for our dairy industry. They update the safety net programs for dairy farmers and give them tools to manage price volatility. They also reduce the regulatory burden on our industry, eliminate programs that make us less competitive and simplify the federal milk marketing order system.

Although we’ve been working on policy reform proposals for years, this is only the beginning of the process of rewriting dairy policy in Congress. The next farm bill is on the agenda for passage in 2012, and while some have mused that dairy might get done ahead of that schedule, past history combined with the inability of Congress to get moving on even the most important issues might better predict a timetable that will slip past the next presidential election.

That delay may not be such a bad thing. It will provide the opportunity for everyone to understand the nuances of all of the policy options on the table and to get involved to support those options you think will be best for the U.S. dairy industry. This will be time well spent, because we’re looking at long-term global market dynamics that are markedly different from any seen before in our history.

As IDFA’s board members have concluded, it’s time to strip away programs of the past that have encumbered our industry and stifled innovation. We strongly believe that our proposals will take us down the right path for the future. (For more information, see related article on page 5.)

We have an opportunity to get this right, and I certainly hope we won’t let it pass.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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